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LNG 'irreplaceable' as China seeks to cut emissions, raise gas use: CNOOC

Perth — LNG will play an "irreplaceable part" in meeting China's emissions reduction targets and plans to lift the share of gas in the domestic energy mix over the next few years, CNOOC Vice President Li Hui told the LNG 18 conference in Perth, Western Australia, Friday.

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China pledged at last year's UN climate change conference in Paris to reduce its CO2 emissions by 60%-65% per unit of GDP from the 2005 level by 2030.

The government, as part of moves to tackle air pollution, is also targeting to cut coal's share of China's primary energy mix to less than 60%. Gas has lifted its share of China's primary energy consumption from 4% in 2010 to 6% currently, Li said.

In 2015, China consumed 193.2 Bcm of gas, up 5.7% year on year. Official forecasts suggest natural gas consumption will rise to 10% of the primary energy mix by 2020, which represents 300 to 360 Bcm/year.

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LNG will be an "indispensable supplement to domestic gas supply," Li said. It will help diversify gas imports, safeguard national energy security and will be the major clean energy source in China's coastal areas, he added. China's LNG industry has grown strongly since its first LNG receiving terminal was commissioned in Dapeng in 2006.

There are now 11 terminals operating in China, with another three under construction, giving the country total capacity of more than 40 million mt/year.

Over the same period, China's LNG imports have surged from 0.75 million mt/year to nearly 20 million mt/year, and the fuel now represents 14% of total natural gas consumption, Li said.

A complete LNG industrial chain has emerged, including LNG shipping and transportation, regasification, city gas, power generation and chemicals, he added.

State-owned CNOOC imported more than 13 million mt/year of LNG in 2015, accounting for 70% of China's total intake.

The company's sales of gas in the Chinese market last year totaled 32 Bcm.

Li said CNOOC's term contracted volume of LNG has reached 25 million mt/year, making it the world's third-largest buyer. To date, the company has brought seven LNG receiving terminals into operation and has another two under construction in the strongly growing southern and eastern coastal provinces.

CNOOC's total LNG receiving capacity is more than 33 million mt/year. The company also operates around 3,500 km of gas pipelines, six gas-fired power plants and nearly 200 LNG vehicle filling stations in China.

--Christine Forster, christine.forster@platts.com
--Edited by Geetha Narayanasamy, geetha.narayanasamy@platts.com